DDEC proposes sales tax-free zones to revitalize urban centers

By The Star Staff

Economic Development and Commerce (DDEC by its Spanish acronym) Secretary Manuel Cidre on Thursday proposed creating “sales and use tax-free zones” in urban centers as a way to revitalize them, and transferring some of the Puerto Rico Industrial Development Co. (PRIDCO) buildings to municipalities so that they can help maintain them.

Cidre, who spoke during a Puerto Rico Manufacturers Association forum with private sector leaders, did not elaborate on his plan to revitalize urban centers in the island’s 78 towns to bring in businesses and repopulate them. However, he did say he was exploring the idea of creating sales and use tax-free areas in those urban centers as a way of helping businesses attract customers who would not have to pay the tax.

During the presentation, Cidre discussed his ideas for easing business restrictions by facilitating permits and ending longstanding uncertainty in the business environment in order to attract investors.

“We are working on a new platform to access services on incentives and permits,” he said.

Although there is a global scarcity of structures for establishing manufacturing plants, Puerto Rico has structures available for investors to open up factories and large plants even though many are deteriorated. The idle buildings are owned by the Puerto Rico Industrial Development Co., which is now part of DDEC.

“We cannot hide the deterioration of the PRIDCO buildings, but in Puerto Rico it is difficult to identify resources to fix the buildings, including for demolishing some of them,” Cidre said.

He said DDEC is communicating with municipalities to offer the structures to them and maybe transfer them to the towns.

“Over the next few months, there will be a declaration from the Federal Emergency Management Agency to provide funding to demolish and even rebuild these structures,” he said.

Noting that he wants to hasten the permitting process, Cidre came out against plans to change incentive decrees.

“If we want to distinguish ourselves as a serious country, we must respect agreements,” he said. “If we must change them, then let’s do it prospectively. Over the past few years, Puerto Rico has played that game [of switching back and forth], not only at DDEC but in the Legislature and the executive branch. Playing to the crowd creates the perfect storm. If a pharmaceutical company leaves, Puerto Rico loses.”

Gov. Pedro Pierluisi Urrutia, meanwhile, also said he hopes to make the island’s permitting regime more flexible through reforms.

“I want this to work for the use permits,” the governor said. “Basically the role of the government is to check and inspect, but the permit should be granted as soon as the check is done.”

On Feb. 9, Pierluisi appointed Ildefonso Ortiz López as La Fortaleza adviser on permitting and to handle amendments regarding governmental permitting processes.

Pierluisi also said he will continue to push for the island to attract biomedical manufacturing firms.

“We have to take advantage of the times and do everything we have to do to guide sustainable development,” the governor said. “We are all clear that a multisectoral strategy is required. There are no magic bullets. We are going to use all means and resources to promote Puerto Rico as an ideal destination for biomedical manufacturing.”

At the event, Pierluisi reiterated his support for the privatization of the Puerto Rico Electric Power Authority through LUMA Energy, which will take over the utility’s transmission and distribution system on June 1.

The governor argued that the energy transformation process began with Law 120 of 2018 and Law 17 of 2019, which establish the island’s public energy policy.

“The path has been laid out and there is no turning back,” Pierluisi said. “The management contract with LUMA is just the beginning of a redesign of the transmission and distribution system with greater openness to energy independence and an aggressive plan to move to renewable energy.”

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